Skip to main content

Full text of "The Economic Impact of Medicaid Expansion"

See other formats


he Economic Impact of Medicaid Expansion 



Executive Summary 

Expansion of Medicaid eligibility for adults earning up to 138 percent of the federal 
poverty level (FPL) is expected to inject $17.4 billion in nev/ federal spending into 
Missouri's economy from 2015 to 2022. Expanding Medicaid coverage v/ould create a 
total of 23,868 jobs over the 8 year period, $9.9 billion in new wages, $14.6 billion in 
new Gross State Product (GSP) and $402 million in new state general revenue by the 
year 2022. The expansion would support the same number of jobs currently employed 
in Missouri's real estate sector. Federal spending of nearly $1 .7 billion in the first year 
of expansion would be on par with what the University of Missouri System paid its 
employees in wages and benefits during FY2013.^ 



Contents 



I. Missouri's Healthcare Industry 

II. Assumptions and Methodology 

III. What are the Economic Impacts of Expanding Medicaid? 

IV. References 



MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



FEBRUARY 2014 



I. Missouri's Healthcare Industry 



The healthcare sector is a major employer in Missouri, and the state's rural counties 
are especially dependent on healthcare industry employment. 

The statewide average ratio of healthcare jobs to total employment is 7.6 percent. 
Thirty-eight rural counties exceed this average, shov/ing the greater dependence of 
these communities on the healthcare sector (see AAAP 1). In 35 counties, at least 10 
percent of the total employed population v/orked in the healthcare industry.^ 



MAP 1 . Healthcare Sector Employment as a Percentage of Total 

County Employment 




MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 2 



As depicted in MAP 2, average healthcare wages in both urban and rural counties are 
higher than the average county wages in those areas. In rural counties that average 
wage is $30,246, while the healthcare wage is 46% higher at $44,289. The average 
healthcare wage in urban counties is $53,525, making it 15% higher than the overall 
average wage of $46,545. The average healthcare worker earned 50 percent or more 
than the average county wage in 28 Missouri counties. 



MAP 2. Percent Difference in Average Healthcare Wages to 
Average County Wages 



Percentage Difference 

45.1% -65.3% 
35.2% - 45.0% 
0.0% -35.1% 
Less than 0% 




\ Psmls! 
16.5« 



39% 



MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 3 



II. Assumptions and Methodology 



Medicaid expansion is expected to TABLE 1. Federal Medicaid 

increase federal healthcare spending in Expansion Funds (in Millions) 

Missouri by just over $17.4 billion dollars | " 1 



from FY2015 through FY2022 (see TABLE 
1 ). Those new dollars will be used to treat 
patients across the state and result in 
additional spending by health care providers, 
which will have broader economic impacts over 
the 8-year period. 



2015 


$1,681 


2016 


$2,242 


2017 


$2,197 


2018 


$2,169 


2019 


$2,219 


2020 


$2,246 


2021 


$2,284 


2022 


$2,375 


Total 


$17,412 



Source: Missouri Office of Admin. In Fiscal Years. 



It is estimated that 297,024 Missourians will 

become newly-eligible for Medicaid benefits in FY2015 under the proposed expansion. 
The number of newly-eligible adults is expected to reach 313,250 by FY2022.^ The map 
below (see MAP 3) shows the number of newly-eligible adults by county. 



MAP 3. Newly Eligible Adults by County in FY2015 



Putnam 
270 


249 


Sullivan 
443 


A4ai[ 
1,480 








Newly Eligible Adults 

20,000 or more 
6,001 - 19.999 
-6.000 
I 2,000 or less 




MorateaU ^, Galsconade 
935 Cole ' 777 

3.213 Osage Franklin 
584 

Jenerson 

.-- ,676 Maries "> 

(Hickory ^134 phejjs ,,,95 ,,23 

5J< - 1 1 .1 PulasU I 2i515 

2,787 



3t. Francois 
3,G0S 



Perry 
957 



Iron Madison 
I Reynolds 5S4 I 544 



Cape Girardeau 
r J.602 

iBollingel' 

L™',-L 



McDonald t lite 'f'™' Taney 
I 876 K ■ 3,273 




MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 4 




MAP 4 depicts the estimated provider payments in 2022 for newly-enrolled adults in 
each county if Medicaid is expanded. Rural counties are expected to benefit from 
$893 million in provider payments in year 2022, while $1.48 billion is projected for 
urban counties. 



MAP 4. Estimated Provider Payments by County for 
Newly Enrolled Adults in 2022 



In millions of dollars 

^^^1 $150 or more 
S50- $149.9 
5.1 -$49.9 
$15 or less 




/$14.8 



iPemla! 
$7.8^ 



MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 5 



The Missouri Economic Research and Information Center (MERIC) analyzed the 
economic impact of expanding Medicaid in terms of job gain, increases in wages paid 
to Missouri workers, rise of gross state product (GSP), and changes to state general 
revenue. 

The Regional Economic Models, Inc. (REMI) Policy Insight model, which MERIC has 
utilized for over a decade to forecast statewide and regional economic impacts, was 
used in this analysis. Unlike static 

economic models such as IMPLAN, MAP 5. REMI Regions 

the REMI model takes into account 
changes over time such as the 
migration of new workers and 
families into an area which adds 
costs to government services. The 
dynamic features of the REMI 
model typically result in more 
conservative impact estimates than 
other economic models. 

Accordingly, the analysis provided 
in this report should be viewed as a 
conservative estimate of the positive impact to jobs, wages, GSP, and state revenue, 
as the actual impacts may be more pronounced than the estimates provided. 

The REMI model is updated annually with federal data from the Bureau of Economic 
Analysis, Bureau of Labor Statistics, Census Bureau, and other agencies. In addition, 
MERIC calibrates the model's fiscal component with annual Missouri Office of 
Administration budget figures to produce more accurate estimates of the impact to 
state general revenue. 




MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 6 



III. What are the Economic Impacts of Expanding 
Medicaid? 



Medicaid expansion during 2015-2022 is expected to increase federal healthcare 
spending in Missouri by over $17.4 billion dollars. 

Expanded federal Medicaid funding over the 8 year period is estimated to create a 
total of 23,868 jobs. These new jobs are expected to earn $9.9 billion in cumulative 
wages from 2015 through 2022. Cumulative Gross State Product (GSP) is expected to 
grow by over $14.6 billion and state net general revenue will increase by $402 million 

TABLE 2 below summarizes the estimated impact on jobs, wages, GSP, and general 
revenue by state and regions if Missouri were to expand Medicaid coverage. 



TABLE 2. Cumulative Economic Impacts by State and Region 



Region 1 


Jobs 


Wages 
(in Millions) 


GSP 
(in Millions) 


State GR 
(in Millions) 


Statewide 


23,868 


$9,928 


$14,616 


$402 


Northwest 


619 


$226 


$342 


$8 


North Central 


412 


$121 


$193 


$5 


Northeast 


341 


$112 


$164 


$4 


Kansas City 


2,124 


$1,065 


$1 ,453 


$33 


Greater Kansas City 


2,019 


$878 


$1 ,259 


$31 


West Central 


648 


$201 


$311 


$7 


Central 


1,673 


$606 


$960 


$24 


Upper South Central 


878 


$278 


$462 


$9 


St. Louis City 


1,149 


$654 


$929 


$20 


St Louis County 


4,454 


$2,305 


$3,285 


$100 


St Charles County 


1,790 


$746 


$1,071 


$44 


Greater St. Louis 


2,330 


$790 


$1,139 


$39 


Southwest 


1,013 


$358 


$550 


$13 


Greater Springfield 


2,353 


$884 


$1 ,435 


$37 


Lower South Central 


460 


$137 


$213 


$6 


Upper Southeast 


810 


$297 


$453 


$12 


Lower Southeast 


796 


$268 


$397 


$10 



Notes: Average total jobs over time period. Net general revenue figures. 



MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) PAGE 7 



TABLE 3 below summarizes the estimated economic impacts of jobs, wages, GSP and 
state net general revenue by year. 



TABLE 3. Annual Economic Impacts by Year 





P 1 


_____ 






Year 1 










Measure 


2015 


2016 


2017 


2018 


2019 


2020 


2021 


2022 1 


Average Jobs 


19,850 


26,380 


25,637 


24,679 


24,344 


23,718 


23,182 


23,153 


Wages * 


$955 


$1 ,307 


$1,310 


$1,291 


$1,291 


$1,271 


$1,251 


$1 ,252 


GSP* 


$1 ,483 


$1 ,984 


$1,941 


$1,882 


$1,869 


$1 ,834 


$1,806 


$1,817 


State GR* 


$53 


$67 


$59 


$53 


$48 


$44 


$40 


$38 



*Present value dollar figures in millions. 



The three regional maps (AAAP 6-8) illustrate the distribution of positive impacts across 
Missouri in terms of jobs, wages, and GSP. 



MAP 6. Job Impacts by Region 




MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 8 




MAP 7. Wage Impacts by Region MAP 8. GSP Impacts by Region 




IV. References 



1 . University of Missouri System Fiscal Year 2013 Operating Budget. Office of 
Planning and Budget. 

https://uminfopoint.umsystem.edu/media/fa/budget/operating/FY2013BudgetBoo 
k.pdf 

2. Healthcare sector (Ambulatory Care and Hospitals) employment and wage 
information from the Quarterly Census of Employment and Wages, 2"'' Quarter 
2013, U.S. Bureau of Labor Statistics. 

3. Estimates for the increase in federal funds to Missouri health care providers due to 
Medicaid expansion and nev/ly eligible adults provided by the Missouri Office of 
Administration. 



FEBRUARY 2014 | MEDICAID EXPANSION REPORT 
MISSOURI ECONOMIC RESEARCH AND INFORMATION CENTER (MERIC) 



PAGE 9